Daily digest market movers: Pound Sterling drops on cooling UK labor market conditions
- The Pound Sterling falls sharply as the United Kingdom ONS reported softer-than-expected <wbr>Employment data for the three months ending in January.
- The Unemployment Rate climbed to 3.9%, higher than expectations and the prior reading of 3.8%. UK employers laid off 21K workers against hiring of 72K job-seekers in three months ending in December. In February, the Claimant Count Change grew moderately by 16.8K from expectations of 20.3K. In January, individuals claiming jobless benefits were 3.1K, downwardly revised from 14.1K.
- Average Earnings Excluding Bonuses grew by 6.1%, against expectations and the previous reading of 6.2%. Earnings including bonuses rose at a slower pace of 5.6%, against the consensus of 5.7% and the prior reading of 5.8%.
- The pace at which Average Earnings (both with and without bonuses) for three months ending January declines is higher than expected by market participants. Slower wage growth is expected to allow Bank of England policymakers to consider rate cuts earlier than anticipated.
- Conversely, on Monday, BoE policymaker Catherine Mann warned that there is a long way to go to bring down inflation sustainably to the desired target of 2%. Mann was one of the two policymakers who voted for a rate hike in the February monetary policy meeting.
- This week, the Pound Sterling will remain in action as investors will shift focus to the UK monthly Gross Domestic Product (GDP) and the factory data for January, which will be published on Wednesday.
- The GBP/USD pair is expected to remain on its toes as the United States inflation data, released at 12:30 GMT, will lead the next move in the US Dollar.
- Monthly headline inflation is forecasted to have risen by 0.4% from 0.3% in January. In the same period, core inflation, which strips off volatile food and energy prices, is anticipated to have grown at a slower pace of 0.3% against the prior reading of 0.4%. As for annual figures, economists expect that the headline CPI will remain sticky at 3.1% and the core inflation will decelerate to 3.7% from 3.9% in January.
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